RMB Undervaluation and Appreciation

The bilateral real exchange rate between Chinese renminbi (RMB) and the US dollar is studied. The panel data Penn effect model shows that the RMB was overvalued in 1980–1991 but later undervalued in 1992–2010. In 2010, it was undervalued by 36.7%. Econometric analysis and an examination of the appreciation of seventeen currencies belonging to countries and areas under the same economic development stage show that the RMB should appreciate at an annual speed of 3.2%. At this rate, the RMB misalignment in 2010 will be corrected by 2020. In the future, RMB appreciation should be realized totally from the nominal exchange rate, not partly from the nominal exchange rate and partly from the relative price level. This appreciation path satisfies the interests of both China and the US

New Classical Solutions in Supergravity

In this Ph.D. thesis we construct three classes of new solutions to supergravity theories in various dimensions and study their properties. The first class is reduction ansatz of 10D and 11D supergravity on Ricci-flat and noncompact manifolds. These reductions are from a scaling limit of the famous spherical reductions, and can be solely supported by warp factors. The second class contains a large number of String/M theory solutions that have Lifshitz or Schrodinger scaling symmetry, obtained from marginally deforming the geometry of internal dimensions of previous solutions. We propose that these new solutions are dual to marginal deformations of certain holographic non-relativistic field theories. The last class are singly spinning non-spherical black holes named black rings in 5D $U(1)^3$ supergravity with three dipole charges and three electric charges, which lie in the classification of 5D nonsupersymmetric black holes. We analyze their thermodynamic and global properties. As a byproduct, we embed the three dipole black ring into spacetime that contains background magnetic fields

Understanding the behavioral equilibrium exchange rate model via its application to the valuation of Chinese renminbi

In this paper, the behavioral equilibrium exchange rate (BEER) model used in a time-series setting is investigated, via its application to the valuation of Chinese renminbi. A classical definition with its generalization is given. The different misalignment results derived from the BEER models are proven to result from the different econometric component choices. It is found that some of the misalignment results are consistent with Chinese economic facts, but some others are not. Finally, four main flaws unavoidable under the BEER model are given and analyzed

Is there a rule of thumb for absolute purchasing power parity to hold?

The low power of the unit root and cointegration tests in testing absolute purchasing power parity (PPP) is illustrated. The real exchange rate (RER) misalignment distribution test is advanced. Then we apply the RER misalignment distribution and coefficient restriction tests to study the validity of absolute PPP in 40 main countries (against the US) in light of the Penn effect. The validity of absolute PPP in each of the 40 countries is analyzed. Finally, a rule of thumb for absolute PPP to hold is given

A simple model and Its application in the valuation of eleven main real exchange rates

A simple currency valuation model is given. The model is based on the Penn effect but reduces the uncertainty of the econometric specification that the Penn effect and many other models have. I use the model to valuate eleven main currencies’ bilateral real exchange rate against the US dollar from 1980 to 2010. In the model finding, a seeming convergence phenomenon is found

A comparison of the BEER and Penn effect models via their applications on the valuation of the Renminbi

The behavioral equilibrium exchange rate (BEER) and the Penn effect models are compared via their applications on the valuation of the Renminbi (RMB). The definition for the Penn effect model is provided. The differences and relations between the two models in various econometric method settings are listed and explained. The Penn effect model is concluded to be the more reasonable model in terms of the valuation of the RMB under the time-series and cross-section data settings. In addition, the criteria and methods of comparing different model findings are given and used to compare typical misalignment results on RMB derived from the two models